Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 7.0%. Also, bonds can be issued at a pretax cost of 9.5%. Common Stock: Retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $94. Flotation costs will be $4 per share. The recent common stock dividend was $4.72. Dividends are expected to grow at 8% in the future. What is the cost of external equity?